Acquired
02:25:14 · David Rosenthal, Ben Gilbert
[02:25:14] S1: But it was when when it was announced that the Finsen rules were gonna get repealed even though it went into effect in 1995. Castle Rock sells to Turner. [02:25:21] S0: It was a $100,000,000 in cash for Castle Rock's owners, plus another 300,000,000 or so in paying off the outstanding debt. So the total out of pocket that Turner paid for Castle Rock, which owns that huge share of Seinfeld's profits and a bunch of other great stuff, was about 400,000,000. What an unbelievable steal to get the Castle Rock library for that. [02:25:46] S1: And, of course, that happened before the actual sales of the first syndication cycle for Seinfeld. Right. Right. Oh. Also, isn't there a wild story that Steve Bannon was an investment banker on that deal and took some of his commission in equity on the Seinfeld Waterfall? [02:26:05] S0: The details are a little bit murky on this, but I have seen it reported that Steve Bannon still gets royalties from Seinfeld syndication. [02:26:14] S1: Yeah. Because of because of this deal. Wow. Wow. So Turner and TBS buys Castle Rock, and then they turn around and sell to Time Warner in all this consolidation that's happening. The net of which is that Castle Rock and the largest ownership slug of the Seinfeld Waterfall ends up in the Warner Brothers library. Alright. So, Ben, you said now is a great time to sell. In the moment, yes, for Castle Rock. But, actually, even if they had no viable future business [02:26:56] S0: From Finson ending.
02:26:56 · Ben Gilbert, David Rosenthal
[02:26:56] S0: From Finson ending. [02:26:57] S1: From Finson ending, They should have waited because the value of the Seinfeld Waterfall, once syndication hit, was about to become way more than the $400,000,000 that they paid for it. [02:27:08] S0: I'll spoil the ending for everyone. We're pretty sure that Castle Rock, if you work through the whole waterfall, made somewhere between 2 and $2,500,000,000 on Seinfeld syndication over the years. But they captured almost none of that because they sold the entire entity. And so it was actually Turner and then Warner Brothers, the IP's ultimate resting place that would have received [02:27:38] S1: Those dollars. [02:27:39] S0: Share of those proceeds. So, I will revise my previous statement. Castle Rock absolutely should not have sold, but no one could have known that Seinfeld would go six syndication cycles and be as relevant as ever three decades later. [02:27:52] S1: Yep. But importantly, Sony keeps the distribution rights. We'll come back to that when we get to streaming in a little bit. Yep. So that was the business story of Seinfeld from 1993 to 1995, culminating in that first syndication sales cycle where Sony generates an astounding $500,000,000 in revenue that hits the, so to speak, cap table. [02:28:17] S0: Right. Sony gets there, cut off the top of that, but then there's probably 400 plus, maybe 425 ish million dollars that then flow through to everyone else who owns the Seinfeld IP just for this first cycle of syndication to the off network affiliates to watch around The US.
02:28:17 · Ben Gilbert, David Rosenthal
[02:28:17] S0: Right. Sony gets there, cut off the top of that, but then there's probably 400 plus, maybe 425 ish million dollars that then flow through to everyone else who owns the Seinfeld IP just for this first cycle of syndication to the off network affiliates to watch around The US. [02:28:36] S1: And, then the next year, in 1996, Larry leaves the show. [02:28:43] S0: Honestly, it's hard to blame anyone after walking through the intense pace that they'd been working at for six years now. [02:28:50] S1: Well, yes. And, yes, I think that is the reason Larry left the show. He was totally burned out. He'd gotten married at this point. He was ready to move on with his life. But putting that aside, now that you know the economic history of the show, Larry leaving in 1996, of course, makes sense. Right. Why stay? Everybody just got the payday in 1995 from syndication. He's in the money, and he's not just in the money with a onetime payout now. He's in [02:29:19] S0: the money forever. And it's not like he was making a lot. I don't think. Again, we have no access to these private contracts. But in general, a nonacting creator lead writer is not drawing a giant paycheck Right. On a per episode basis in making a show that, you know, you own the show. So you're expected to make your money on the back end, which is gonna happen whether or not he makes any new episodes. [02:29:45] S1: Again, to use a startup analogy here, this is like the company went public and the lockup ended.
02:29:45 · David Rosenthal, Ben Gilbert
[02:29:45] S1: Again, to use a startup analogy here, this is like the company went public and the lockup ended. [02:29:51] S0: Yeah. That is the right way to Yep. Yep. There's a lot more value you could build, but other people can build it too. [02:29:56] S1: You're gonna have a life changing event. [02:29:58] S0: Yes. But for the show, this is brutal because everyone else was kinda just a input to Larry in the writers room. And Larry was like, we heard him referred to as the CPU. You know, he would be the one that ultimately would come in on weekends, do the rewrites. You could get a script most of the way there, and you could always be confident that Larry would make it great. Without Larry, they need an entirely new process. Right. [02:30:23] S1: And, like, Jerry was there as the, you know, coprocessor, but he's also starring in the show. [02:30:28] S0: Oh, Jerry was not available to play Larry's role because No. You can't have a lead writer who is also running the whole show as producer and the lead actor and, you know, doing all those rehearsals that we talked about. So what this leads to is more people are involved in the writing process, and they just need more hours. So now all the writers are coming in on weekends, not just Larry like the old days. And when we were talking to Alec Berg about this, who was a writer on the show, he told us that he looked at his calendar at one point and realized that he had come into the office every day for some amount of time for fifty six days. Yeah.
02:30:28 · Ben Gilbert, David Rosenthal
[02:30:28] S0: Oh, Jerry was not available to play Larry's role because No. You can't have a lead writer who is also running the whole show as producer and the lead actor and, you know, doing all those rehearsals that we talked about. So what this leads to is more people are involved in the writing process, and they just need more hours. So now all the writers are coming in on weekends, not just Larry like the old days. And when we were talking to Alec Berg about this, who was a writer on the show, he told us that he looked at his calendar at one point and realized that he had come into the office every day for some amount of time for fifty six days. Yeah. [02:31:03] S1: Yeah. What was the story like they would go watch the Super Bowl, and then they'd all go all go back to the office after? [02:31:08] S0: Yeah. Jerry would run a suite for everyone at the Beverly Hills Hotel and then back to the office. [02:31:12] S1: So it's a Herculean task after Larry leaves. Castle Rock and and by extension NBC keep upping Jerry's salary, like the amount that he was being paid per episode for all of his duties. First to $500,000 an episode, and then by the ninth and what would end up being the final season of the show to an unprecedented million dollars per episode. [02:31:38] S0: Per episode. Per episode. For one person who also owns the show. [02:31:44] S1: Who also, yes, gets all that back end that we were talking about.
02:31:44 · David Rosenthal, Ben Gilbert
[02:31:44] S1: Who also, yes, gets all that back end that we were talking about. [02:31:47] S0: The tenor of my voice should not be anything around, like, surprise or didn't earn it. But it's just like to underscore, these are separate things getting paid as the person making the show slash acting in it and the ownership. [02:31:59] S1: Yep. The show, though... I mean, look. You can argue whether seasons eight and nine are as good as the Larry seasons. [02:32:07] S0: They're certainly different, but they're more ambitious. [02:32:09] S1: They are more ambitious. Yeah. The only way that they could find to sort of move past Larry was to try and do bigger stuff. [02:32:16] S0: And there's some classics. I mean, true true all timers in there. The Bizarro Jerry. Yep. The chicken roaster, the Kenny Rogers episode. Yes. The Andrea Doria. Muffin tops, is that in there? The pothole. [02:32:29] S1: Van Buren boys? [02:32:30] S0: Yep. Yada yada yada. Yep. You're right. Muffin tops, the Summer of George. I mean, this is season eight. Get Like firing on all cylinders. Season nine, the butter shave, the voice hell. Oh. Serenity now is season nine. [02:32:45] S1: That's right. Yeah. Terry's still [02:32:47] S0: in got a bigger role. The slicer, the dealership, the reverse peephole, the wizard. These are all season nine. [02:32:54] S1: Yeah. Yeah. So creatively, definitely different, but still excellent. Ratings and ad sales wise, though, for NBC. [02:33:03] S0: That's changed quite a bit.